ABSTRACT

The role of the social accounting matrix, SAM, is sometimes seen as that of a helpful tool in the setting-up and estimation of corresponding models. An overview of modelling and social accounting matrices in Thorbecke (1984) concludes that the advantage of forcing a model into a social accounting framework is that one can discover inconsistencies of which the authors were not even aware. The discipline of building an explicit SAM ensures that the initial values of the variables in the system are internally consistent. There is another important role that a SAM can play, however. By appropriate manipulations, the table can be rearranged so as to give sets of exogenous variables and a coefficient matrix that can be subjected to a useful multiplier analysis, which gives insight into the working of the economic system.